Infosys shares fell 2% in early trading on Friday, despite the company increasing its profit by 13.2% in the September quarter. Brokerage houses have given mixed ratings on the stock, while also keeping it as a top pick. Investors can decide their future strategy for the stock, keeping in mind the upcoming macro factors and revenue guidance.
Infosys Share: IT giant Infosys's shares tumbled 2% to Rs 1,472 in early trading on October 17. This decline came after the company's September quarter results, where net profit rose 13.2% to Rs 7,364 crore and revenue increased by 8.6%. Brokerage houses have maintained a mixed outlook on the stock, with Motilal Oswal giving a target price of Rs 1,650 and Nomura setting it at Rs 1,720. For investors, the future strategy will depend on the company's revenue guidance and global uncertainties.
Q2 Results and Revenue Performance
Infosys performed well in the second quarter of the current financial year. The company's net profit stood at Rs 7,364 crore, which is 13.2 percent higher than the same quarter last year. Total revenue reached Rs 44,490 crore, with key contributions from the financial services and manufacturing sectors.
On a constant currency basis, Infosys's growth rate was 3.7 percent. This performance was better than that of competitor TCS, but lagged behind HCLTech's growth rate of 5.8 percent.
The company also raised its revenue forecast, reporting large deals and new orders. In July, the company had estimated revenue growth of 1 to 3 percent for the current financial year. This estimate has now been increased to 2 to 3 percent.
Salil Parekh, CEO and MD of Infosys, stated that the situation remains uncertain. The second half is typically sluggish, but the company is securing good deals. For this reason, he has slightly increased the revenue forecast.
Brokerage House Outlook
Motilal Oswal has maintained its 'Neutral' rating on Infosys. They have set a target price of Rs 1,650 for the stock, indicating a potential return of over 12 percent.
Meanwhile, Nomura has given Infosys a 'BUY' rating with a target price of Rs 1,720. Previously, this target was Rs 1,730. Thus, the stock could offer investors returns of up to 17 percent.
Brokerage houses believe that Infosys has not fully emerged from its difficulties. The company's revised revenue guidance indicates slower growth in the second half of the fiscal year.
Both the company's revenue and margin were below market estimates. However, Infosys raised the lower end of its revenue guidance while keeping the upper end unchanged. This reflects current macroeconomic uncertainties and the expected slow recovery in discretionary spending.
Target Prices from Other Brokerage Houses
Axis Securities has given Infosys a 'BUY' rating with a target price of Rs 1,620 for the stock. Antique Stock Broking gave it a 'Hold' rating and set a target of Rs 1,675.
Brokerage houses have reiterated Infosys as their top pick in the large-cap Indian IT sector. They estimate that the company will record 4.1 percent revenue growth on a dollar basis in FY 2025-26, with approximately 40 basis points of this growth coming from acquisitions.
